DETROIT—Comerica Bank’s Michigan Economic Activity Index declined in June to a level of 86.6, another all-time low for the index.
The index is comprised of nine variables: nonfarm payroll employment, continuing claims for unemployment insurance, housing starts, a housing price index, industrial electricity sales, auto assemblies, total trade, hotel occupancy, and sales tax revenue. All data are seasonally adjusted, adjusted for inflation, and expressed as a three-month moving average.
Bank officials said five of the variables were negative in June—nonfarm employment, unemployment insurance claims, industrial electricity demand, total state trade, and state sales tax revenue. Four, however, were positive—housing starts, house prices, light vehicle production, and hotel occupancy.
Comerica economists said they “caution against assuming that this is a V-shaped economic recovery. After relaxing some social mitigation policies in late spring, many states experienced an uptick in COVID-19 cases by mid-summer, requiring them to tighten policies again. Now with the school year starting, we remain cautious about the potential for increased COVID-19 cases this fall. Also, the demand destruction from the spring shutdowns is still reverberating through the economy. We expect most states, including Michigan, to face a lingering high unemployment rate well into next year, and that will be a drag on overall economic activity … Despite the huge amount of economic churn that we are seeing, housing markets and auto sales have been stronger than expected, helped by low interest rates. However, shaky consumer confidence is a risk to both consumer sectors.”